Greater New Orleans

Chevron completes move to the North Shore

Eliot Kamenitz / The Times-PicayuneChevron has hired a national firm, Cushman & Wakefield, to sell its building at 935 Gravier St. in the CBD. Local real estate brokers say it could be difficult to find a buyer because it was designed for a single, large tenant.

Following the well-trod path of energy companies that have left the city, Chevron will vacate its downtown New Orleans office building today and celebrate the opening of a gleaming regional headquarters in an office park just south of Covington.

The company's announcement in 2006 that it would relocate across the lake ruffled Mayor Ray Nagin and other urbanites who were already heartsick about the centrifugal pull Hurricane Katrina has exerted on the city's population and on the few large corporations that provide high-paying jobs.

Today's move seems all but certain to accelerate the movement of professionals across the lake. About half of Chevron's employees lived on the north shore before Katrina, and the company has offered a relocation package to south shore residents who dread the long commute across the Causeway.

Chevron also leaves a forlorn memento at 935 Gravier St., the cream-colored office tower that now sits empty in the heart of downtown. The company has hired a national firm, Cushman & Wakefield, to sell the building, but local real estate brokers say it could be difficult to unload because it was designed for a single, large tenant of the sort that is not moving to New Orleans these days.

While the relocation might be read as a loss for New Orleans and a gain for its fastest-growing suburb, several economic development experts cautioned against taking the parochial view. As Houston has succeeded in making itself the epicenter of the energy industry, they say Louisiana is lucky to retain the company at all.

Barbara Johnson, chief operating officer at the regional economic development group GNO Inc., said the oil and gas industry remains a large and complex regional force, with engineers, suppliers and other firms that feed off the major production companies scattered among the north shore, New Orleans and the West Bank. She said the high price of oil and gas should spur investment across the region, not just in St. Tammany Parish.

"We're bullish on the energy sector, and we see continued opportunities for new investment in the region," Johnson said.

Chevron was also anxious that its move not be seen as an abandonment of New Orleans.

"We're still committed to Louisiana. That is a firm belief of ours," spokeswoman Qi Wilson said. "We consider Covington the greater New Orleans area."

Lowering storm risk

Wilson said the company has steadily shifted its 550 local employees to the north shore campus during the past few months. The new headquarters bustled on Wednesday in advance of today's grand opening, while the New Orleans office showed few signs of life.

Wilson said Chevron decided to relocate as a hedge against future storms. Katrina caused $1 million in damage to the Gravier Street building, which the company repaired. Several brokers said the building, which dates to 1981 and contains about 351,000 square feet of office space, is in good condition.

Richard Stone, director of commercial sales and leasing at Latter & Blum, said Chevron has not quoted a price for its Central Business District offices but that the company's success in selling the building would hinge on the price it is willing to accept. He said the company must consider that it would be expensive for a buyer to retrofit the building, which until Wednesday housed only Chevron, to accommodate multiple tenants.

Bruce Sossaman, leasing director at Equity Office Properties, said Chevron's best hope is perhaps to lure an institutional buyer like the city or the state that would command a large volume of office space.

Chevron is one of several energy companies moving to the north shore or expanding its operations there. LLOG Exploration is building a new headquarters near the Louisiana 21 corridor south of Covington. Wink Engineering, a firm that works closely with oil and gas companies, also bought land near Covington for a future expansion.

'Concern about safety'

Marty Mayer, president and chief executive of Stirling Properties, which has offices in the same office park as Chevron, said companies that employ a large professional work force have moved to the north shore to escape the real and perceived pitfalls of doing business in New Orleans.

"Some of the companies that recruit nationally find it easier to recruit and retain people because the north shore lifestyle and environment is a little bit more what they're accustomed to than living in New Orleans," Mayer said. "Unfortunately, there is still concern about safety with respect to the levees and the publicity regarding crime."

Kurt Weigle, president and chief executive of the Downtown Development District, said he does not expect much of an exodus from the city in the future. He noted that the region's major law firms, many of which derive their business from the oil and gas industry, are firmly anchored downtown.

While he regretted the loss of Chevron, he said the city was "fortunate" that the company left at a time when the vacancy rate for downtown office buildings is generally low.

"If firms already had the inclination to move to other locale, they took the opportunity of Katrina to do it," Weigle said. "We're hoping there's not going to be any further deterioration."

Kate Moran can be reached at kmoran@timespicayune.com or (504) 826-3491.